7 Ways to Pay off Student Loans Faster

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7 Ways to Pay off Student Loans Faster

Look, we don't need to sugar coat this – student loans unquestionably suck. I've talked to thousands of readers with student loans over the past three years, and I don't think I've come across a single person that didn't really want to get rid of their student loan debt faster.

If you don't have student loans, it's hard to explain the feeling that comes from opening your first repayment notice. In one piece of paper, all of the excitement of getting your college degree and starting a new (hopefully fulfilling) career is tainted by the fact that you owe a crapload of money to someone else for what seems like an eternity.

Fortunately, you don't have to be stuck with student loans for the rest of your life.

Even if you read that last sentence and rolled your eyes because it seems like you may never be able to find a way out from underneath your debt, there's still hope.

I've seen every situation imaginable while running this website, from doctors with $600,000 of student loans to people like me who tried to battle $40,000 on a teacher's salary. If there's a situation out there, I've probably witnessed someone overcome it and beat their loans.

So how can you do it? What are some ideas you can try to put your student loans past you sooner and start living your best life? Here are some of the strategies that I've personally tried and seen readers try as well to pay off their student loans quickly:

Utilize your grace period

Keep your living expenses extremely low

Start a side hustle

Consider refinancing

Get a real budget

Pay off higher interest debt first

Make bi-weekly payments

Have the patience of Zeus

1. Utilize your grace period

Unfortunately, that's not how it really works. The “grace period” refers to the amount of time a borrower has before they are required to begin making payments toward their student loan debt. Depending on the type of loan you have, the period of time can be different.

Now let's be honest – the time period can actually be really helpful for most borrowers. It can take some serious time to get the job you want in the field that you're qualified to work in. Having a few extra months to get your adulting together can be extremely helpful for coming up with a plan to pay down your student loan debt.

But unfortunately, interest typically accrues during the grace period, which means that you'll have more student loan debt than you did when you graduated from college when you start making payments. That's not fun.

Here's my suggestion: start making payments as quickly as possible.

Even if it's picking up a side job or starting a side hustle (which I detail later in this post) while you search for your main gig, paying down your student loans early can help you keep the interest at bay while also giving you a head start on your debt. If you're trying to keep your loans in check from the start, making payments during the grace period is the most effective way to do it.

2. Keep your living expenses extremely low

Out of everything on this list, I'd probably say that keeping your expenses low is the least fun. But with that said, it's probably the most effective. Housing costs, as you probably know, can be pretty tough to deal with when you're also battling student loan debt.

None of these strategies are particularly sexy, but they work. Personally, I rented a room from my in-laws when I was paying down my student loan debt. It wasn't free, but it was cheap. It also sucked. But I can tell you that since I've moved out and now have zero student loan debt, my life is pretty awesome.

The reality is that paying back your student loans quickly is probably going to force you to make some tough decisions that will temporarily lower your quality of life. Nobody wants to have multiple roommates. Nobody wants to live with their parents. And nobody likes sitting on hold with insurance companies.

But if you can put yourself into uncomfortable situations early and make bigger payments on your student loans, you'll have the rest of your life to have the fancy crib with tons of space to yourself.

3. Start a side hustle

Paying off student loan debt can be boiled down to a simple concept:

You can either spend less money and make bigger payments, or make more money and make bigger payments. If you do both, then you're a financial rock star.

There are tons of cool side hustle ideas out there, but the ones that I believe are the most effective involve learning a valuable skill that you can charge a lot of money for. I've taught over 1,000 people how to run FB ads for small businesses and make an extra $1,000 to $2,000 per month in their spare time.

4. Consider refinancing

Let's be clear: refinancing is not for everyone, especially if you have federal student loans and feel like you're going to rely on an income-based repayment plan or student loan forgiveness. But if you are someone with a steady income, above average loan balance, and have loans with a high-interest rate (6% or above) – student loan refinancing could be a great option for you.

When you refinance your loans, you're essentially paying off your old loans with a brand new loan at a lower interest rate. That will save you money, especially if you continue to attack your debt with some of the other strategies mentioned in this article.

If you find something that works for you, great! If not, at least you know that you aren't leaving money on the table.

5. Get a real budget

With all of the tools out there to track your money right now, there really isn't a reason to not use a budget to track your spending. If you're like me, you probably won't like using pen and paper (although there's nothing wrong with that if you're old school).

The better you track your money, the more you'll find to throw at your student loans. Get after it.

6. Pay off higher interest loans first

Look, some people like to use the Debt Snowball approach and pay off their smallest student loan balance first and work up to the largest one. There's nothing wrong with that if the quick wins of paying off debt faster are what it takes to keep you motivated!

However, it's not the fastest approach. I recommend using the Debt Avalanche approach. All you need to do is sort your various student loans by highest to the lowest interest rate. After that, you start making extra payments towards the loan with the highest rate and work down from there.

You won't feel quick wins, but you'll keep more money in your pocket by paying less in interest over the course of your repayment.

7. Make bi-weekly payments

Making payments every two weeks might sound like a pain, but it has a pretty sweet payoff.

If you make bi-weekly payments for the entire year, you'll actually end up making an extra payment without even realizing it. Any time you can add a payment and not really “feel” it is a great win against your student loans.

Wondering how it works? Check it out:

There are 52 weeks in a year. When you make a payment every other week, it comes out to 26 payments for the entire year, which gives you 13 full payments instead of the 12 you would normally pay. Pretty cool, right?

There are a few things you'll want to make sure you do:

Make both of the payments before your bill is due

Be sure that the lender applies the extra payment correctly

If both of your payments don't make it in before the next bill comes, you'll end up making a payment that's smaller than what you actually owe. The easiest way to get started is to wait until your next bill comes, and then start the bi-weekly payments immediately afterward.

When it comes to making sure that the payment is applied correctly – it's just a precaution. You can't ever really trust the student loan servicer to do what's in your best interest. Sad but true.

Remember: You need to have the patience of Zeus

Anyone who has paid off student loans early will tell you that it's not easy. In fact, I hate it when I see posts about “Easy Ways to Pay Off Student Loan Debt”!

Paying off student loans takes tons of patience, and I very specifically remember feeling like I wasn't getting anywhere even though I was throwing almost everything I possibly could from my teaching salary at the loans.

You have to play the long game. That's it. So many people don't ever get out from under their student loans because they aren't prepared for how hard it's going to be.

It's going to be frustrating. It's going to suck for a long time. But life on the other side is incredible and totally worth all of the hard work.

Comments

Great article! I’m always looking for ways to pay down student debt faster. I graduated with $20k in loans and paid it off by living with my parents. I recently married a man with $60k (had $100k from high-interest rates during the recession). We are hoping to have that paid off in 30 months.

Utilizing the grace period is always my number 1 tip too!! My loan system wouldn’t let me set up auto payments during the grace period, so I just assumed you weren’t supposed to pay! And by the end of the grace period, what do you know…I had accrued $3,000 more of interest!! I had no idea interest still tacked on! Ugh.

Obviously the grace period is there for a reason, like if you don’t have a job yet, then totally use the grace period to full advantage. But if you’re like me, and had a job 2 weeks after graduation, don’t just do nothing for 6 months!!! PAY!!!

This is a timely post for me. I am beginning to allocate some extra money towards paying off my remaining student loans at an accelerated rate. I’m torn though on investing while simultaneously paying down the loans like I have done in the past. Part of me wants to throw every additional dollar at the loans to knock them out, but the other part of me understands interest rates, rates of return, opportunity costs, etc. Did you invest while you paid down your loans or were you single-minded in your efforts?

I finished paying back my student loans ($25k) about 2 years ago – right around the time we found the FIRE community and started getting serious. I’m sad to say it took me 15 years to get serious enough to pay them back in full.

This is great! Love all your insight and tips. I am currently at $78k in outstanding loans (down from roughly $100k). I just started paying double my minimum payment and will be starting bi-weekly Payments ASAP. Goal is to get loans to $60k and then start family planning but still aggressively pay down. Thanks for all your advice!!

Great post Bobby! Hope you and the family have some R&R lined up for the summer.

I wish I could’ve read a post like this when I graduated 5 years ago. The biggest mistakes I made were not having a plan to attack the debt or a clear picture on my entire financial situation (like your point #5). I was just paying the minimums and the mindset I’d taken was “this is just a part of my life and everyone in my generation experiences it”.

After having my aha moment, that’s when controlling my spending, earning additional cash via side hustling and throwing extra payments against the principal became the focus. Crush, crush, crush that debt.

My $38K wasn’t crippling but man I wish I could do things over…from before I went to University (scholarships and saving more), to my time during it (working during and more scholarships) and of course after (plan and priority). But you live and learn!

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